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The fact that a person receives a sum of money does not necessarily mean that it amounts to the consideration for a supply of goods or services. In Mohr v Finanzamt Bad Segeberg¹, the ECJ found that an agreement, entered into by a dairy farmer under the provisions of an EU Regulation, which helped farmers coming out of milk production, did not amount to a supply of services. It was held that the undertaking given by the farmer did not entail any benefit to either the EU or the member state, which would enable them to be considered recipients of a service. Therefore, the payment made to the farmer was compensation and was outside the scope of VAT. The relevant question is: Was anything done for a consideration²?

For the supply to be taxable within the meaning of Archived Directive 2006/112/EC³ (ie the Directive as it stood at IP completion day⁴), there must be a link between the supply of goods or services supplied by one person